US growth higher; Renault next diesel cheat; China to expand high-speed rail; 3rd wave of globalisation coming; UST 10yr yield 2.2=4%; gold up, oil up; NZ$1 = 65.4 US¢, TWI-5 = 71

Here’s my summary of the key events overnight that affect New Zealand, with news that geopolitical risks rose dramatically this morning with Turkey shooting down a Russian warplane that strayed over the Syrian border. It is possible risk aversion will be rising in markets today.

In the meantime, it was reported that the American economy grew at a stronger +2.1% pace in the September quarter than the +1.5% initially reported, but a strong rise in inventories in those 3 months could be limiting growth in current quarter.

The updated GDP expansion was pretty much as analysts were expecting, but the personal consumption component ‘only’ came in at +3.0% rather than the +3.2% expected which raises a small query on the future direction by a key driver.

In fact, a closely watched consumer confidence survey out overnight revealed a solid dip in American confidence in their November reading, continuing a softening trend.

VW’s diesel scandal is widening. A popular Renault model has now been fingered as another serious culprit, as we await the results of broader, official tests by the German agency that oversees the official testing. And all this is happening on the eve of UN climate talks about to start in Paris. Very much a black-eye for European engineering and policy makers.

China has announced the building of six new high-speed rail services over the next five years. These infrastructure projects are expected to boost investment by at least US$100 bln. China has about 25,000 kms of high speed rail. The system’s economic viability is unknown as it is entirely managed, planned and financed by the government.

China will need projects like this as the early indications of current factory activity are not encouraging.

However, according to an HSBC report, we are about to enter the “third wave of globalisation” that will help quadruple the value of international trade by 2050.

In New York, the UST 10yr yield benchmark slipped slightly to 2.24%. Following the shooting down of the Russian jet this is likely to fall further.

The US benchmark oil price is slightly higher for a second day in a row, now just over US$43/barrel, while the Brent benchmark is just over US$46/barrel. Expect a jump in reaction to the Russian jet downing.

The gold price followed oil higher, now at US$1,076/oz and probably on the way up today.

The New Zealand dollar starts today at 65.4 US¢, at 90.3 AU¢, and at 61.4 euro cents. The TWI-5 is at 71, a level it has been at all week.

If you want to catch up with all the local changes yesterday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here »

Daily exchange rates

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for(i=0;i

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